Correlation Between Lotte Non and Eugene Technology
Can any of the company-specific risk be diversified away by investing in both Lotte Non and Eugene Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lotte Non and Eugene Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Non Life Insurance and Eugene Technology CoLtd, you can compare the effects of market volatilities on Lotte Non and Eugene Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lotte Non with a short position of Eugene Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non and Eugene Technology.
Diversification Opportunities for Lotte Non and Eugene Technology
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and Eugene is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life Insurance and Eugene Technology CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Technology CoLtd and Lotte Non is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lotte Non Life Insurance are associated (or correlated) with Eugene Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Technology CoLtd has no effect on the direction of Lotte Non i.e., Lotte Non and Eugene Technology go up and down completely randomly.
Pair Corralation between Lotte Non and Eugene Technology
Assuming the 90 days trading horizon Lotte Non is expected to generate 1.05 times less return on investment than Eugene Technology. In addition to that, Lotte Non is 1.04 times more volatile than Eugene Technology CoLtd. It trades about 0.03 of its total potential returns per unit of risk. Eugene Technology CoLtd is currently generating about 0.04 per unit of volatility. If you would invest 2,381,456 in Eugene Technology CoLtd on September 2, 2024 and sell it today you would earn a total of 958,544 from holding Eugene Technology CoLtd or generate 40.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life Insurance vs. Eugene Technology CoLtd
Performance |
| Timeline |
| Lotte Non Life |
| Eugene Technology CoLtd |
Lotte Non and Eugene Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non and Eugene Technology
The main advantage of trading using opposite Lotte Non and Eugene Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non position performs unexpectedly, Eugene Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eugene Technology will offset losses from the drop in Eugene Technology's long position.The idea behind Lotte Non Life Insurance and Eugene Technology CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eugene Technology vs. Korea Investment Holdings | Eugene Technology vs. PLAYWITH | Eugene Technology vs. DB Financial Investment | Eugene Technology vs. LB Investment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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